New Delhi, March 2 – Himachal Pradesh Chief Minister Sukhvinder Sukhu met with Union Finance Minister Nirmala Sitharaman on Monday and requested a financial package under special central assistance to cover the revenue deficit for the 2026-27 fiscal year.
The Chief Minister informed the Union Finance Minister that the discontinuation of the Revenue Deficit Grant (RDG) would have a significant negative impact on the state's financial health, adding that Himachal Pradesh cannot be compared to other states whose RDG has been discontinued.
He stated that the state's contribution from the RDG was approximately 12.7%, which was the second-highest after Nagaland. Larger states can withstand the discontinuation, but Himachal Pradesh's economy cannot, he said.
Emphasizing that assessing all states using a single standard is neither healthy nor transparent, Sukhu termed the discontinuation as "undermining the spirit of cooperative federalism".
He stated that Article 275(1) of the Constitution provides for such grants to the state, which cannot bridge the gap between their revenue receipts and expenditure, and this was the first time that the Finance Commission has completely ignored the developmental needs of small hill states.
He also informed the Union Finance Minister that, over the past two to three years, several measures were taken to reduce expenditure, no off-budget borrowing was resorted to, and about Rs 600 crore annually was raised through various cesses.
The Himachal Pradesh Chief Minister said that the state suffered revenue losses due to the Goods and Services Tax (GST) and added that despite raising tax rates wherever feasible and rationalizing subsidies, the revenue deficit gap cannot be bridged.
Chief Minister Sukhu requested the Union Finance Minister to constitute a committee to properly assess the economies of hill states and recommend corrective measures, and she assured sympathetic consideration for the state's demands.